Monday, June 30, 2014

Politics Pays

Chelsea Clinton and her mother, former US Secretary of State Hillary Clinton, stand onstage before a No Ceilings conversation at Lower Eastside Girls Club in New York in April.

Chelsea Clinton, from her $10.5 million perch on Gramercy Park, declares that she finds it impossible to care about money. Bill and Hillary Clinton, shuttling between their multimillion-dollar homes — Chappaqua, Washington, the $200,000-a-month rental in the Hamptons — denounce the wicked rich and protest that they are not “truly well off.” A professor of poverty and left-wing activist at the University of North Carolina School of Law is paid $200,000 per annum to teach a single class; anti-inequality crusader Elizabeth Warren was paid $350,000 per annum to teach a single class and thinks deeply about the plight of the little guy in her $1.7 million Cambridge mansion. The city of Bell, Calif., was nearly bankrupted by the very generous salaries its political class secured for themselves: nearly $800,000 per annum for the chief executive of the modest Los Angeles suburb, on his way to collecting a $1 million annual pension. (Several Bell leaders were later charged with misappropriating millions of dollars’ worth of public money for their own benefit.) Philadelphia was paying the feckless chief executive of its violent and defective government schools some $350,000 a year before the mayor got around to firing her, but not before the city wrote her a check for nearly $1 million to make her go away — and then she filed for unemployment benefits. A Philadelphia police lieutenant on an $87,000 annual salary takes home nearly $200,000 after nearly a hundred grand in “overtime” kicks in. The head of the Tennessee Valley Authority, a federal enterprise, was paid nearly $6 million in 2013; the agency’s chief financial officer and chief lawyer were paid $2.1 and $1.9 million, respectively, that same year. The school superintendent in Lubbock, Texas, is paid nearly a quarter-million dollars a year.

Politics pays.

Consider a separate but not entirely unrelated economic development under way at the same time: A number of innovative technology firms, including Uber, Lyft, and AirBNB, are under attack from entrenched, politically connected economic interests. Uber and Lyft threaten the privileges of politically protected taxi cartels and the unions attached to them, while AirBNB subverts the traditional hotel arrangement. Each of those services takes something that it is perfectly legal to do for free — allowing a traveler to use your home temporarily, giving somebody a lift to the airport — and allows people to do them for money. (Here one is reminded of George Carlin’s argument for the legalization of prostitution: “Selling is legal. F****** is legal. Why isn’t selling f****** legal?” There are a great many reasons for that, none of which apply to charging a fee for car service.) Which is to say, these services allow ordinary people to generate revenue by making the most out of otherwise underutilized assets, a possibility that is of non-trivial concern as participation in the work force plunges.

Uber, AirBNB, et al. are very popular with consumers and producers alike. In fact, that is the reason that politicians and the entrenched economic interests in whose service they operate are dedicated to destroying them: Nobody would worry about Uber if so many consumers did not judge it preferable to traditional cartel-run taxi services. The very fact that Uber is in the judgment of many consumers a better product is what provides the motive for destroying it. That is economic, intellectual, and moral perversion, but that is how politics operates. Its mandate is to stand between consumers and producers until it gets its cut.

On the one hand, we have Category A, comprising products and services that people willingly — eagerly — embrace, which provide better goods at better prices. (It doesn’t matter if you think that’s true; economic values are subjective, and consumers like what they like.) On the other hand, we have Category B, comprising products and services that cannot earn revenue on their own, and that pay their employees and executives inflated salaries out of money collected at gunpoint through the tax system. What is most perverse about this arrangement is that the firms in Category A are obliged to ask the parasites in Category B for permission to engage in commerce. In any rational society, something close to the reverse would be the case, and those entrusted with the management of our common affairs would look to the most productive and innovative firms and thinkers for guidance in how to go about managing the public business. In a rational society, the powers that be in New York City, San Francisco, and Seattle would be bringing notebooks to their meetings with technology entrepreneurs instead of whips and palms eager to be crossed with payoffs.

Our political bureaucracies are grasping and vicious, and some of the larger of them are dominated by people who are, if we’re being frank, not especially bright. No society can long thrive by making its creators and innovators subservient to its pimps and thieves. But agencies with the power to tax or the power to pay themselves out of taxes have the power to command, and, human nature being what it is, it is not surprising that their executives use that power to extort for themselves extraordinary levels of compensation (occasionally through criminal means, as in the Bell case), even as they bore us all to death talking about the sacrifices they have endured on behalf of their careers in “public service.” Political power outlasts political office: Hillary Clinton is no longer secretary of state or a senator or in any of the other positions she has held as a form of tribute paid to her husband; but she very well may be a future president. She has been paid an enormous advance on a book that almost certainly will not justify that expenditure, and collects speech honoraria that are, if not quite up at her husband’s stratospheric levels, nonetheless substantial. What is she being paid for? It is hard to see how economic value, strictly understood, explains that. No doubt part of the value is celebrity: When the American Bankruptcy Institute advertises the speakers at its annual conference as your obedient correspondent and Jay Leno, one of those names is putting many more butts in chairs than the other. But celebrity probably does not explain it all, either. Political power is worth investing in, and worth renting when it is needed.

It is baffling that my progressive friends lament the influence of so-called big money on government while at the same time proposing to expand the very scope and scale of that government that makes influencing it such a good investment. Where government means constables, soldiers, judges, and precious little else, it is not much worth capturing. Where government means somebody whose permission must be sought before you can even begin to earn a living, when it determines the prices of products, the terms of competition, and the interest rates on your competitors’ financing, then it is worth capturing. That much is obvious.

Progressives refuse to see the inherent corruption in the new ruling class — and, make no mistake, we now have a ruling class — because it is largely made up of them, their colleagues, and people who are socially and culturally like them and their colleagues. Getting a couple hundred grand a year to teach one class doesn’t look so crazy if you think you might be the guy who gets the check next time around. You can be an anti-elite crusader on behalf of the poor and disenfranchised from your million-dollar mansion, even if you never find yourself so much as downwind from a poor person, without fearing charges of hypocrisy: Ask Senator Warren. Of course Chelsea Clinton does not have the sense or the good taste to be embarrassed when talking about her blasé attitude toward money: Money is invisible to her for the same reason that water is invisible to a fish — she’d notice it if it weren’t there, and flap like a desperate landed mackerel until she’d secured her next big payday.

Major General Smedley Butler famously declared that “war is a racket,” and there is some compelling evidence for that proposition. But when you need an army, you need an army. Nobody needs a Tennessee Valley Authority or a taxi cartel — not at any price, really, but certainly not at this price. It is time to start calling this what it is and treating it as what it is: corruption.